Are we expecting BOE to remain at 4.75% on 8th February 2025?

Hoenir

lojo1000 said:

Hoenir said:

lojo1000 said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

 Credit markets are not all about fixed term debt, 

There's £200 billion of UK mortgages alone to be refinanced by the end of 2025. A significant sum. 

This will not be a problem unless unemployment rises/ recession occurs. Terms can be extended as banks are trying to avoid a tsunami of credit defaults. For now, this is all under control.

My comment is with reference to the mechanics. That £200 bn of funding has to be sourced from somewhere, i.e. savers deposits, Retail Backed Mortgage Securities etc.  Why is an Asian investor going to lend money at say 3% for 5 years when risk free US Treasuries offer a return of around 4.5% currently.  Even UK Gilts offer 4%+ returns. 

The re-mortgage will set at the market rate which is, in most cases higher than the existing rate. I'm not sure what you think the issue is, if indeed you see one?

I agree that's where we are heading,  market rates again. I don't foresee any issues. Just further normalisation of the credit markets. Back towards a pre 2007 era. 

MobileSaver

Hoenir said:

lojo1000 said:

Hoenir said:

lojo1000 said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

 Credit markets are not all about fixed term debt, 

There's £200 billion of UK mortgages alone to be refinanced by the end of 2025. A significant sum. 

This will not be a problem unless unemployment rises/ recession occurs. Terms can be extended as banks are trying to avoid a tsunami of credit defaults. For now, this is all under control.

My comment is with reference to the mechanics. That £200 bn of funding has to be sourced from somewhere, i.e. savers deposits, Retail Backed Mortgage Securities etc.  Why is an Asian investor going to lend money at say 3% for 5 years when risk free US Treasuries offer a return of around 4.5% currently.  Even UK Gilts offer 4%+ returns. 

The re-mortgage will set at the market rate which is, in most cases higher than the existing rate. I'm not sure what you think the issue is, if indeed you see one?

market rates again. I don't foresee any issues. Just further normalisation of the credit markets.

You mean there won't be a raft of repossessions and loads of half-price houses by Christmas? Crashy will be disappointed (again.)

caprikid1

"If Labour get in and Starmer makes a speech about material spending increases that will be something to listen to. The country cannot afford the money needed to fix the NHS, etc so it can only be done by tax rises or debt. Either way, that is not positive for debt markets."

Surely just reducing the waste and fraud will pay for a lot of this, so much money leaving the government to close associates, Rowanda etc, Start collecting back the all the fraudulent bounce back loans, the list is endless. At least the money will get spend for the good of the nation.

lojo1000

caprikid1 said:

"If Labour get in and Starmer makes a speech about material spending increases that will be something to listen to. The country cannot afford the money needed to fix the NHS, etc so it can only be done by tax rises or debt. Either way, that is not positive for debt markets."

Surely just reducing the waste and fraud will pay for a lot of this, so much money leaving the government to close associates, Rowanda etc, Start collecting back the all the fraudulent bounce back loans, the list is endless. At least the money will get spend for the good of the nation.

I think we'd all agree to seek efficiencies and reduce corruption as well as close the tax gap but all of that is an ongoing process and not any change in policy which would make any noticeable difference.

I don't think this present govt has the will for any material change. Perhaps in a second term, if all goes well they may reconnect more with the party's roots.

Strummer22

lojo1000 said:

caprikid1 said:

"If Labour get in and Starmer makes a speech about material spending increases that will be something to listen to. The country cannot afford the money needed to fix the NHS, etc so it can only be done by tax rises or debt. Either way, that is not positive for debt markets."

Surely just reducing the waste and fraud will pay for a lot of this, so much money leaving the government to close associates, Rowanda etc, Start collecting back the all the fraudulent bounce back loans, the list is endless. At least the money will get spend for the good of the nation.

I think we'd all agree to seek efficiencies and reduce corruption as well as close the tax gap but all of that is an ongoing process and not any change in policy which would make any noticeable difference.

I don't think this present govt has the will for any material change. Perhaps in a second term, if all goes well they may reconnect more with the party's roots.

In 2010 the conservatives inherited empty coffers and pursued austerity. The eventual result has been anaemic growth, a sickening workforce and crumbling public services. 

Now labour has inherited that mess and there's still little fiscal wiggle room. If they can effectively weed out fraud and tax evasion, close tax loopholes, further tweak the tax system to discourage underemployment, and couple this with increased efficiency and targeted investment where there will be a good return, perhaps they can turn things around and then have a mandate to invest further without spooking the markets. 

The sensible choice for now is to try and keep markets as calm as possible and give BoE as many reasons to cut as possible. Cheaper gov debt = less interest, more money available to invest.

Personally not sure why Labour want to be in power and I can see why the Tories sabotaged their campaign. Who would want to be in charge of this mess?  

Hoenir

MobileSaver said:

Hoenir said:

lojo1000 said:

Hoenir said:

lojo1000 said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

 Credit markets are not all about fixed term debt, 

There's £200 billion of UK mortgages alone to be refinanced by the end of 2025. A significant sum. 

This will not be a problem unless unemployment rises/ recession occurs. Terms can be extended as banks are trying to avoid a tsunami of credit defaults. For now, this is all under control.

My comment is with reference to the mechanics. That £200 bn of funding has to be sourced from somewhere, i.e. savers deposits, Retail Backed Mortgage Securities etc.  Why is an Asian investor going to lend money at say 3% for 5 years when risk free US Treasuries offer a return of around 4.5% currently.  Even UK Gilts offer 4%+ returns. 

The re-mortgage will set at the market rate which is, in most cases higher than the existing rate. I'm not sure what you think the issue is, if indeed you see one?

market rates again. I don't foresee any issues. Just further normalisation of the credit markets.

You mean there won't be a raft of repossessions and loads of half-price houses by Christmas? Crashy will be disappointed (again.)

There'll be pressure on some household finances that's a certainty. Not just interest rates that maybe an issue. Company insolvencies are on the rise. Loss of household income while having no savings safety net may well be a challenge as well. Lenders having a duty of care now should see situations better managed than in the past. Repossession after all is the last resort. 

lojo1000

Strummer22 said:

lojo1000 said:

caprikid1 said:

"If Labour get in and Starmer makes a speech about material spending increases that will be something to listen to. The country cannot afford the money needed to fix the NHS, etc so it can only be done by tax rises or debt. Either way, that is not positive for debt markets."

Surely just reducing the waste and fraud will pay for a lot of this, so much money leaving the government to close associates, Rowanda etc, Start collecting back the all the fraudulent bounce back loans, the list is endless. At least the money will get spend for the good of the nation.

I think we'd all agree to seek efficiencies and reduce corruption as well as close the tax gap but all of that is an ongoing process and not any change in policy which would make any noticeable difference.

I don't think this present govt has the will for any material change. Perhaps in a second term, if all goes well they may reconnect more with the party's roots.

 

The sensible choice for now is to try and keep markets as calm as possible and give BoE as many reasons to cut as possible. Cheaper gov debt = less interest, more money available to invest.

BoE should not be cutting rates. BoE should not have control of monetary policy, the markets should be left alone to price risk.

Also, the average maturity on UK govt debt is 15 years and what the BoE does to the overnight rate has little impact on the interest cost of UK govt debt. If the BoE artificially held the rate low for a long period so the treasury could refinance at lower, short term rates it would do more harm to the economy (artificial excess monetary demand) than benefit the govt coffers and also increase interest rate risk (of rates rising again) on the outstanding debt portfolio.

If there was any impact from BoE reducing o/n rate, then all GBP debt is impacted in the same way and there is no relative benefit to the govt - all debt becomes more expensive and less attractive to investors.

The only way interest rates should come down is demand and supply of money in the market, demand being lower than supply. Cutting speculative monetary demand through taxing outstanding mortgage debt issued on pre-existing homes (providing no productive/innovative benefit to the economy) would be one way to achieve this.

I welcome your thoughts.

ReadySteadyPop

Hoenir said:

MobileSaver said:

Hoenir said:

lojo1000 said:

Hoenir said:

lojo1000 said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

 Credit markets are not all about fixed term debt, 

There's £200 billion of UK mortgages alone to be refinanced by the end of 2025. A significant sum. 

This will not be a problem unless unemployment rises/ recession occurs. Terms can be extended as banks are trying to avoid a tsunami of credit defaults. For now, this is all under control.

My comment is with reference to the mechanics. That £200 bn of funding has to be sourced from somewhere, i.e. savers deposits, Retail Backed Mortgage Securities etc.  Why is an Asian investor going to lend money at say 3% for 5 years when risk free US Treasuries offer a return of around 4.5% currently.  Even UK Gilts offer 4%+ returns. 

The re-mortgage will set at the market rate which is, in most cases higher than the existing rate. I'm not sure what you think the issue is, if indeed you see one?

market rates again. I don't foresee any issues. Just further normalisation of the credit markets.

You mean there won't be a raft of repossessions and loads of half-price houses by Christmas? Crashy will be disappointed (again.)

There'll be pressure on some household finances that's a certainty. Not just interest rates that maybe an issue. Company insolvencies are on the rise. Loss of household income while having no savings safety net may well be a challenge as well. Lenders having a duty of care now should see situations better managed than in the past. Repossession after all is the last resort. 

Very true, people in many areas have cut their spending considerably I think.

MeteredOut

ReadySteadyPop said:

Hoenir said:

MobileSaver said:

Hoenir said:

lojo1000 said:

Hoenir said:

lojo1000 said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

 Credit markets are not all about fixed term debt, 

There's £200 billion of UK mortgages alone to be refinanced by the end of 2025. A significant sum. 

This will not be a problem unless unemployment rises/ recession occurs. Terms can be extended as banks are trying to avoid a tsunami of credit defaults. For now, this is all under control.

My comment is with reference to the mechanics. That £200 bn of funding has to be sourced from somewhere, i.e. savers deposits, Retail Backed Mortgage Securities etc.  Why is an Asian investor going to lend money at say 3% for 5 years when risk free US Treasuries offer a return of around 4.5% currently.  Even UK Gilts offer 4%+ returns. 

The re-mortgage will set at the market rate which is, in most cases higher than the existing rate. I'm not sure what you think the issue is, if indeed you see one?

market rates again. I don't foresee any issues. Just further normalisation of the credit markets.

You mean there won't be a raft of repossessions and loads of half-price houses by Christmas? Crashy will be disappointed (again.)

There'll be pressure on some household finances that's a certainty. Not just interest rates that maybe an issue. Company insolvencies are on the rise. Loss of household income while having no savings safety net may well be a challenge as well. Lenders having a duty of care now should see situations better managed than in the past. Repossession after all is the last resort. 

Very true, people in many areas have cut their spending considerably I think.

Which is exactly what the rise in interest rates was meant to achieve.

I still think no rise in August, 0.25% reduction in September.

MobileSaver

ReadySteadyPop said:

Hoenir said:

MobileSaver said:

Hoenir said:

lojo1000 said:

Hoenir said:

lojo1000 said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

ReadySteadyPop said:

Hoenir said:

MattMattMattUK said:

Another straw man. It should fall below 4% because to not do so will damage the economy, government and personal finance, it should not be set at a level that benefits only savers. 

All that QE on the BOE balance sheet that was pumped into the banking system primarily to underpin mortgage lending by the banks. Has yet to be transferred onto savers balance sheets. The market will determine the correct level of rates for both savers and borrowers. There's at least a decade of unwinding to go yet. 

Worth remembering that 30 year mortgage rates in the US are currently above 7%. Borrowers in the UK have so far got off lightly. 

And there is a LOT of potential volatility for credit markets.

The nature of fixed term debt is that the unwinding is spread out. There's no cliff edge to speak of.  Adjustment will become seamless. Yes there'll be headline grabbing stories. Be some surprises.  In the main it'll be a quiet and slow process. Even now companies are deleveraging. Sell assets or raise capital through equity issuance. Homeowners will be no different. All making individual decisions based on their own personal financial circumatances. 

 Credit markets are not all about fixed term debt, 

There's £200 billion of UK mortgages alone to be refinanced by the end of 2025. A significant sum. 

This will not be a problem unless unemployment rises/ recession occurs. Terms can be extended as banks are trying to avoid a tsunami of credit defaults. For now, this is all under control.

My comment is with reference to the mechanics. That £200 bn of funding has to be sourced from somewhere, i.e. savers deposits, Retail Backed Mortgage Securities etc.  Why is an Asian investor going to lend money at say 3% for 5 years when risk free US Treasuries offer a return of around 4.5% currently.  Even UK Gilts offer 4%+ returns. 

The re-mortgage will set at the market rate which is, in most cases higher than the existing rate. I'm not sure what you think the issue is, if indeed you see one?

market rates again. I don't foresee any issues. Just further normalisation of the credit markets.

You mean there won't be a raft of repossessions and loads of half-price houses by Christmas? Crashy will be disappointed (again.)

There'll be pressure on some household finances that's a certainty. Not just interest rates that maybe an issue. Company insolvencies are on the rise. Loss of household income while having no savings safety net may well be a challenge as well. Lenders having a duty of care now should see situations better managed than in the past. Repossession after all is the last resort. 

Very true, people in many areas have cut their spending considerably I think.

A couple of weeks ago we decided last minute to spend a few days in the Cotswolds and I struggled to find accommodation, everywhere in my preferred area was fully booked. We also spent a mid-week day at Blenheim Palace and all the optional (at extra charge) tours were fully booked.

Similarly we decided last minute to book the RIAT air show; tickets for the Saturday were already sold out and Booking.com reported 97% of hotels in the area are already fully booked. I was able to get tickets for the Sunday but many of the optional extra-charge enclosures were already sold out.

Obviously this is purely anecdotal but it does show there'll be around 100,000 people visiting the air show on the Saturday alone. Some people may be cutting their spending but clearly a huge number of people are still happily spending on non-essential items.